Business Solutions CenterLegal

Alternatives to Litigation

Going to court can be incredibly expensive. With legal fees, lost-work time, and court costs, the expense of preparing for a trial can be thousands of dollars. Fortunately, there are alternatives to litigation that an increasing number of companies take advantage of. Mediation and arbitration can allow you to avoid litigation while maintaining confidentiality for all parties.

While mediation and arbitration are both designed to resolve issues fairly, they are very different in practice. Mediation involves the use of a neutral third-party to help two conflicting parties negotiate, compromise, and reach a mutually agreeable solution. (Think of a mediator as a skilled person that helps both parties in a dispute remain calm, focused, and reasonable.) A mediator does not make decisions; his or her job is to help two parties reach a solution that they are both comfortable with. Mediation is also non-binding; parties who enter mediation are typically under no obligation to reach agreement.

Arbitration also involves a neutral third party, but the arbitrator's role is to listen to both sides, view any evidence, and make a decision. In effect the arbitrator acts as a judge or jury. The parties can agree in advance that the arbitrator's decision will be binding, or they can have a non-binding arbitration.

Let's look more closely at both litigation alternatives.

Mediation

In mediation, a mediator meets informally with the parties to a dispute and attempts to help them reach an agreement. The mediator does not judge the case but instead seeks to facilitate discussions, the flow of information, and eventually a resolution of the dispute in question. Mediation may be a first step in resolving a dispute, or the parties to a lawsuit may attempt to mediate a dispute after litigating it for several months, in hopes of avoiding a trial. In fact, some jurisdictions require mediation as part of the pretrial process.

Mediation can be used for almost any type of dispute. "Pre-suit" mediation, or mediation that occurs before a lawsuit is filed, is a great way to resolve a dispute before litigation even begins.

Mediators are usually either chosen jointly by the parties to the dispute, or appointed by the court. Mediators do not give legal advice and do not offer legal judgments. Sometimes parties participate in mediation without hiring attorneys, and sometimes the parties bring attorneys with them. If the parties are able to reach an agreement, they will typically memorialize it in writing.

Mediation has several advantages and disadvantages:

It can resolve a dispute more quickly and at less expense than a lawsuit.

Because the parties negotiate an agreement, it is more likely that both sides will feel satisfied with the result.

If the parties do not reach an agreement, there may still be litigation.

Mediations are private, so there is no public record of the dispute unless a lawsuit has been filed.

Arbitration

While arbitration can be non-binding, most people use arbitration as a binding form of dispute resolution. An arbitrator serves as a "judge," hearing the arguments and evidence – evidence that is not limited by judicial rules of evidence – of both parties and then rendering a binding decision. Some cases are handled by a single arbitrator; another common approach is for each party to choose an arbitrator, with the two arbitrators then selecting a third arbitrator to serve on a three-person arbitration panel.

Once an arbitrator renders a decision in a binding arbitration, the parties are bound by it: there is no right to an appeal. And, while it may not be true, some people feel that arbitrators are more likely to "split" a decision in order to at least partially satisfy both parties.

In a non-binding arbitration, the parties are not bound by the arbitrator's decision. If either party is unhappy with it, they can proceed with filing a lawsuit.

Arbitration can dramatically decrease the cost of settling a dispute. Although the parties must pay the arbitrators, the hearing is typically shorter than a jury trial and arbitration rules restrict pretrial discovery and motions. That means the dispute can typically be settled more quickly and legal fees are not as high. Another advantage to arbitration is that the proceeding is private and avoids a public trial.

If you like the idea of using mediation or arbitration as an alternative to litigation, talk to an attorney about how to make that possible.

In some cases, it may be to your advantage to litigate a dispute in court rather than resolve it through alternative methods. Before you choose mediation or arbitration, get the opinion of an experienced lawyer.

The information included on this website is designed for informational purposes only. It is not legal, tax, financial, or any other sort of advice; nor is it a substitute for such advice. The information on this site may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate, in parts. It is the reader's responsibility to comply with any applicable local, state, or federal regulations, and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company, its affiliates, and their employees make no warranties about the information, no guarantee of results, and assume no liability in connection with the information provided.

The information included on this website is designed for informational purposes only. It is not legal, tax, financial, or any other sort of advice; nor is it a substitute for such advice. The information on this site may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate, in parts. It is the reader's responsibility to comply with any applicable local, state, or federal regulations, and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company, its affiliates, and their employees make no warranties about the information, no guarantee of results, and assume no liability in connection with the information provided.